VIX is close to being undervalued: Cheap way to play it

Discussion in 'ETFs' started by nitro, Mar 30, 2016.

  1. are you saying a reverse split isn't the same as if it had traded that high?
     
    #21     Apr 20, 2016
  2. Maverick74

    Maverick74

    That is exactly what I am saying.
     
    #22     Apr 21, 2016
  3. nitro

    nitro

    Long volatility at this point is very difficult. The only way it can be right is you believe the FEDs action will matter less and less to not just the economy, but to the stock market.

    The latter is very difficult position to hold, since value is totally distorted when huge sums of money chase anything other than .25 IRs. To say nothing of endless stock buy backs due to cheap borrowing.

    I say stay away from vola until probably end of this year. There will be moves that will entice one back into vola, but they are impossible to take a stand on apriori unless you are in the business of consistently bleeding theta to buy vega to score big ones once in a while. At this moment in time, imo that is at best a B/E stance.
     
    #23     Apr 28, 2016
  4. If long vol is a breakeven at best in this environment then i suppose you are selling vol then, seeing how it would be risk free.;)
     
    #24     Apr 28, 2016
  5. nitro

    nitro

    How is it risk free? Breakeven does not equal risk free.
     
    #25     Apr 28, 2016
  6. You are the one claiming long vol here is a breakeven at best so perhaps you can enlighten us what short vol would equal in your world?
     
    #26     Apr 28, 2016
  7. nitro

    nitro

    Oh my God, tell me you don't trade options for a living.

    Breakeven and risk free are NOT the same thing. It means that going long or short vol is likely to do nothing but churn commission as you win some and lose some equally on both sides of the market. You could argue that is always true, and you wouldn't be wrong. If I had to bet from here on in to December 2016, I would be short vol. But I wouldn't expect any over sized returns from it.

    Risk free means guaranteed arbitrage. And even that doesn't exist.
     
    #27     Apr 28, 2016
  8. nitro

    nitro

    There are an awful lot of bots posting on ET. These people can't be real.
     
    #28     Apr 28, 2016
  9. I took your post in a more literal way i.e. "long vol here and now, on your next trade". I was thinking vol direction right now and you seem to be more interested in the implied/stat vol spread over a sample of trades and a longer time frame, neither of which you mentioned. And btw, i was merely busting your balls, it's what that wink was for so lighten up.

    On a lighter note, had you been long vol today maybe you wouldn't be in such a sour mood now. :D
     
    #29     Apr 28, 2016
  10. Sig

    Sig

    That's either a fundamental misunderstanding of the concept of reverse stock splits or more probably you're looking at this ETF differently than the stock it is. If you're talking about the underlying index, the no, it hasn't ever been that high. But the ETF has indeed lost that much value and if you had invested $1009 at the peak you'd have about $3 today so it's effectively exactly like the ETF traded at $1009. The ETF doesn't track VIX, as you probably know, it just buys a fixed ratio of current and next month futures, which leads to this almost inevitable decay. Regardless, its still a tradable security and the the convention for reverse splits in tradable securities (as well as for dividends) is and always has been to adjust the pre-split or pre-dividend price so you can compare apples to apples, and refer to the split adjusted price when referring to historical data. No reason to treat this security any differently than AAPL in the quoting and discussion convention on the mechanics of splits.
     
    Last edited: Apr 29, 2016
    #30     Apr 29, 2016
    .sigma and userque like this.